Digitalising with purpose through value chain optimisation
Increasing levels of refinery-petrochemical integration, operating mode changes and technologies will be required to increase naphtha and other petrochemical feedstocks to meet expected growth in petrochemicals demand and decline in transportation fuels. As a result, the future comprises a world of transportation fuels refineries, refinery-integrated petrochemical plants and crude oil to chemicals (COTC) complexes.
Not only will the energy transition present a demand-driven mandate to incorporate petrochemicals at many sites, but so too will shareholders. The incremental improvement potential with increased conversion capabilities of a fuels refinery with added petrochemical integration is 1.5 to 2 US$/bbl of crude processed.
The shift toward petrochemical production is a result of value chain optimisation. Embracing value chain optimisation requires the pursuit of demand-pull business models where the market determines the use value of the product. As a result, agile optimisation and alignment of feedstocks, products and operations is required to reflect market demand and prices. The vision for the refinery-integrated petrochemical business should be one of a portfolio of assets, which are synchronised with their supply chains and surrounding business environment. The whole supply chain – not just parts of it – should continuously respond to market signals and disturbances and optimise holistically on a minute-by-minute basis. The outcome should be a fast-automated response to dynamically changing plant and market conditions.
Whilst this concept may not be altogether new, the refining and petrochemical industry has struggled to fully embrace it in their business models. However, there has never been a more important time to consider value chain optimisation in refining and petrochemicals, especially with COVID-19 related demand destruction in the transportation fuels sector and to a somewhat lesser extent, the petrochemical market. Longer term, demand growth for transportation fuels is expected to slow coming into 2040, then go negative, whereas demand growth for petrochemicals feed stocks is expected to grow steadily with population growth.
The implication of ‘alignment’ involves a mindset shift from an organisation being inwardly oriented and focused on ‘product’ and own organisational needs, to outwardly oriented and focused on market needs and customer experience. A shift from product-push to demand-pull business models. Only then can effective commercial optimisation of the business occur. Value chain optimisation done right should enhance autonomy of the asset in how it is operated. This is achieved through increased plant automation and evolution of the business model. Achieving autonomous operations is all about empowering the plant to run, learn, adapt and thrive in tomorrow’s environment, whatever that environment might be.
The key enabler of the evolution toward more autonomous operations is a 1st principle-based Integrated Asset Model (IAM), operationalised with real-time data to create a process digital twin around which holistic, cross-functional convergence in understanding and action across organisation silos can occur. The IAM digital twin constitutes the heartbeat of the asset, from which its ‘pulsations’ drive all other applications.
